Hyperion DeFi, Inc. (HYPD) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to today’s program Eyenovia, Inc. Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s program is being recorded. And now I would like to introduce your host for today’s program, Alex Lobo from The Ruth Group. Please go ahead.

Good afternoon and welcome to Eyenovia's fourth quarter and full-year 2019 earnings conference call and audio webcast. With me today are Dr. Sean Ianchulev, Eyenovia's Chief Executive Officer and Chief Medical Officer, John Gandolfo, Eyenovia's Chief Financial Officer and Michael Rowe, Eyenovia's Vice President of Commercial. Earlier this afternoon, Eyenovia issued a press release announcing financial results for the three months and full-year ended December 31, 2019. We encourage everyone to read today's press release as well as Eyenovia's Annual Report on Form 10-K, which can be filed with the SEC. The company's press release and annual report will also be available on Eyenovia's website at eyenovia.com. In addition, this conference call is being webcast at the company's website and will be archived for future reference. Please note that today’s call we will be describing investigational products, which have yet to be receive the FDA approval. Please also note that certain information discussed on this call cover under the Safe Harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, Eyenovia's management will be making forward-looking statements. Actual statements could differ materially from those stated or implied by these forward-looking statements due to risk and uncertainties associated with the company's business. These forward-looking statements are subject to a number of risks, including risks related to fluctuations in our financial results and stock price, particularly given market conditions and the potential economic impact of COVID-19; our need to raise additional money to fund our operations for at least the next 12 months as a going concern; the potential impacts of the coronavirus pandemic on our supply chain; risks of our clinical trials, including, but not limited to, the costs, design, initiation and enrollment, which could be adversely impacted by the coronavirus pandemic and resulting social distancing, timing, progress and results of such trials; the timing and our ability to submit applications for, obtain and maintain regulatory approvals for our product candidates; the potential success of our reprioritized pipeline; any projected cost savings related to our reprioritized pipeline; our estimates regarding the potential market opportunity for our product candidates; the potential advantages of our product candidates; the rate and degree of market acceptance and clinical utility of our product candidates; our ability to timely develop and implement anticipated manufacturing, commercialization and marketing capabilities and strategies for existing product candidates; our ability to identify new products, our ability to attract and retain key personnel; intellectual property risks; and other detailed and qualified by the cautionary statements contained in Eyenovia's press releases and SEC filings including its most recent Annual Report on Form 10-K and subsequent filings. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast, March 25, 2020. Eyenovia undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be acquired by applicable securities law. With that, I would like now to turn the call over to Dr. Sean Ianchulev.

Thank you, Alex and welcome, everyone to Eyenovia's fourth quarter and full-year 2019 earnings conference. 2019 was a successful year for Eyenovia as we continued to validate our patented piezo-print delivery technology. And as we reprioritize our late stage pipeline to focus on high value indication that we believe now represent an approximately $7 billion total market opportunity in the United States for the company. Earlier in the year, we successfully completed our MicroStat Phase III MIST-1 and MIST-2 studies for pharmacologic mydriasis, which have further validated our novel approach to treating front and back of the eye conditions as well as paved the way towards the new drug application submission to the US Food and Drug Administration later this year. Furthermore, the initiation of our MicroPine Phase III study for progressive myopia, represented a significant achievement last year. And we hope to complete patient enrollment by the end of this year, although the impact of the coronavirus pandemic could result in a delay. We were also very excited to introduce our third Phase III program MicroLine for presbyopia as we reprioritized our pipeline to focus on high value indication. We believe our on demand treatment of presbyopia represents tremendous untapped potential and we are working diligently to initiate the Phase III VISION trial in the months ahead, although the trials could also potentially be impacted by COVID-19. As we continue to rapidly advance our late stage program, we were also very pleased to expand our Scientific Advisory Board with the addition of professor Mark Bullimore and April Jasper, both bring a wealth of scientific academic and practical experience in visual sciences and optometry, childhood myopia and presbyopia and we look forward to leveraging their experience as we advance our product candidates to the clinic. Today, I'm going to highlight our success with the Phase III trials for MicroStat, reveal the progress of the rest of our exciting pipeline, and then hand the call over to Michael to discuss our commercial development strategy. But before we begin, I want to take a few moments to discuss how COVID-19 might impact our company. While we source the number of components from Asia, our supply chain for clinical products has built in lead times that we believe are not currently at risk. That said, we also depend on third-party contract vendors as well as clinical and business partners where the expanding impact of the pandemic on the business environment both locally and globally could have an impact on our business. We are closely tracking environment enrollment in our ongoing clinical study, as well as events that must be completed to initiate upcoming clinical studies. Neither of our programs involves patient populations who are at most at risk for the virus, and we're taking steps to help ensure the health of our clinical partners involved in the study by limiting unnecessary travel and the like. But it is possible that patients may be less inclined or unable to participate in our studies if their mobility is limited by shelter in place orders or the clinical science has temporarily scaled down investigational activities. Additionally, on the vendor side, we depend on U.S based sterilization and sterile field partners for our products. And any shut down or backlogs on their end could have an adverse impact on our business and anticipated milestones. Turning now to our product candidate. MicroStat is our first pipeline program to complete Phase III studies in early 2019, which was very exciting for us as it further validated our technology and approach. As a reminder, MicroStat is our novel fix combination formulation of phenylephrine and tropicamide for pharmacologic mydriasis, two products that are often used together during the approximately 18 million diagnostic eye exams and 4 million cataract surgeries performed each year in the United States. During the first quarter of 2019, we were very pleased to report positive results from the MIST-1 and MIST-2 trials demonstrating that MicroStat was safe and effective for pharmacologic mydriasis by achieving clinically and statistically superior mean pupil dilation to both the individual components and placebo. Both studies achieved their primary endpoint with slightly more than 93% of treated eyes achieving pupil dilation of at least 6 millimeter, at 35 minutes post instillation, just shy of two-thirds of patients reached this same endpoint within 20 minutes. And equally importantly, this efficacy was achieved with only one patient report of stinging among the 131 patients tested. The current eye drop formulations of these drugs often cause significant sting, enough so that many doctors will pre-treat with an anesthetic eye drops. With these Phase III trial results in hand, as well as ongoing stability testing of registration laws, we're preparing to file the NDA with the FDA in late 2020. If approved, this would be our first commercial product and we'll begin introducing ophthalmologists, optometrists and patients to the Optejet technology. We believe that this will help prepare the eye care market for our additional products in presbyopia and myopia. One thing I would like to highlight is a design feature of our Optejet dispenser. We purposely designed the dispenser without any protruding part to minimize the chance of cross-contamination of the product by preventing direct contact with the eye. In a recent study, 40% of eye drop users were found to accidentally touch the eye with the bottle tip when instilling drops. Avoiding this potential contamination source may turn out to be a great -- much greater importance than we felt in the past, particularly since practices use the same eyedropper bottles of multiple patients. Before the current situation, the word epidemic had been used to describe what is happening with our children and their eyesight. Around the world, it is estimated that hundreds of millions of children are becoming progressively more myopic. For the last couple of years, Eyenovia has been working to address this crisis. Our Phase III program MicroPine for the treatment of progressive myopia in children is currently enrolling patients in our CHAPERONE trial. MicroPine represents our largest potential market opportunity. The prevalence of myopia has grown at an unprecedented rate over the last few decades, and according to a recent article in the AAO Journal Ophthalmology, by 2030, nearly half of the population in North America and East Asia is expected to be myopic. With our MicroPine program we aim to tackle this epidemic the way it starts in children, and we believe that we could have one of the first potential pharmacologic treatment options for progressive myopia. In 2019, we initiated our Phase III CHAPERONE study, which is a randomized double mask trial set to enroll more than 400 children between 3 and 12 years of age. The study is examining the safety and efficacy of our proprietary atropine topical micro formulation delivered in the Optejet dispenser for the reduction of progressive myopia. Subjects are being randomized to receive treatment with either of two MicroPine concentrations or a placebo, and the primary efficacy endpoint is the change in refractive error from baseline through 36 months. As we continue to enroll patients in our study, we've been able to gather some preliminary data with regards to patients being able to properly administer their medication with the Optejet. After enrolling in the CHAPERONE study, parents and their child who received the short training session and recent instruction on how to use the Optejet. After this session, we found that in every case, either the parent or child was able to successfully use the dispenser at home to reliably deliver a microdose to the eye. And in most cases, the children, some as young as 6, were able to use the dispenser by themselves. This data is really encouraging and further supports our platform technology's potential to vastly improve the way we treat ocular disease with people across all age groups. Before we move on from our myopia program, I wanted to highlight one regulatory pathway for MicroPine. As many people might wonder why are we only conducting a single Phase III study as compared to the typical two. Our Phase III CHAPERONE trial is not the only study that we will be including in our potential NDA. From our discussions with the FDA, the agency has agreed that they will accept data from the previously completed collaborative academic studies that were published over the last few years. And this is not just for our CHAPERONE study, but for all companies and studies looking at progressive myopia. So this is a very consistent stance by the agency. This supplemental studies include ATOM 1, ATOM 2, and LAMP, which were all well controlled, randomized long-term studies that we have discussed in the past. Each of these studies show that atropine can slow the progression of myopia by between 60% and 70%.We plan to leverage the studies alongside our CHAPERONE study in a potential NDA filing, and we believe that the results of this study significantly derisk the CHAPERONE study. Now let's take a look at our newest program, MicroLine for presbyopia, which has garnered significant interest from the optometric community since we reprioritized our pipeline last year. As you may remember, presbyopia is the non preventable age related hardening of the ocular lens, which causes the gradual loss of the eyes ability to focus on nearby objects. Currently, this space is dominated primarily by devices such as the reading glasses and there are no pharmacologic drugs for this indication. In the United States, presbyopia affects an estimated 130 million people. Of that population, we estimate that 43 million people between the ages of 40 and 65, who have otherwise normal vision and available disposable income could benefit from a pharmacologic treatment option like MicroLine. MicroLine is our proprietary microdose array [ph] print formulation of pilocarpine, which has the potential to improve near vision. MicroLine works by constricting the pupil, increasing the depth of field and focus, and making it easier to see up close. MicroLine is designed as a complement to reading glasses. But when patients do not wish to use glasses and together with our Optejet dispenser is designed to provide good tolerability and make installation easy and simple versus traditional eye drops. We believe that with the combination of our proprietary formulation and our microdose platform, we have the opportunity to enhance the lifestyle of millions of people with a cash-pay prescription drug for the improvement of near vision in the model of other esthetic focused products. Looking ahead, we're currently preparing our Phase III VISION 1 and VISION 2 studies and expects to initiate both trials this year. Although the impact of the coronavirus pandemic could result in delay. Subjects will be randomized to receive treatment with either of two MicroLine concentrations or a placebo. And our primary endpoint of the studies will be binocular distance corrected near visual acuity. So now I would like to turn the call over to our VP of Commercial, Michael Rowe, to discuss commercialization activities.

Thank you, Sean. Later this year, we are planning on filing the NDA for MicroStat. Our novel fixed combination mydriatic for the approximately 80 million comprehensive eye exams performed in the United States each year. This means that we need to prepare for potential product launch next year and align our promotional sales and pricing strategy ahead of that. We recently conducted quantitative market research on MicroStat with 100 ophthalmologists and optometrists who conduct a significant number of pupil dilating eye exams weekly. This research was designed to test our unique selling proposition, key product attributes, measure interest in using MicroStat in place of current products and test our pricing assumptions. The results were compelling for the post-approval launch of MicroStat. I would like to share the major findings with you now. First, we established what practitioners are currently using in their offices were pupil dilation and found that most of those we studied were in fact using tropicamide and phenylephrine together in two separate bottles at a cost of about a $1 per patient, not including the additional costs of a topical anesthetic that was often used. Typically, the offices were using larger bottles across multiple patients, although in the current environment that might be changing and the cost to the office might be increasing. In summary, we were pleased to see from the study that the products being used, how they were being used, and the cost of them matched our prior assumptions. In terms of product concept, a microdose piezo-print fixed combination that produced the efficacy and tolerability seen at our Phase III program. About two-thirds of these practitioners reported high moderate to high interest in the MicroStat product concept. Some of the key comments included: this is a great idea. It's novel. I can't wait to use it. While the few concerns were almost exclusively around cost, which we plan on addressing with our pricing strategy. Among the key product attributes, there was great interest in the fact that dispenser had no protruding parts, that dilation was quick and that the product could be given to patients without an anesthetic. Currently, conventional dilation is often preceded by an anesthetic drug to reduce any discomfort and pain from the dilating eye drops, which as you know, contains 3x to 4x more acidic formulation and preservative than what would be in the microdose product. On the MicroLine product and with presbyopia, we also conducted market research with 100 presbyopic adults who use glasses for reading, have a household income over $50,000 and who are between the ages of 40 and 60. In this survey we saw that there was very high interest from these patients. More than two-thirds indicated they would be very interested in using the product as described. We found the strongest interest among men between 45 and 60 and women between 50 and 60. And for those who had a household income over $100,000, which we believe comprises about 30% of the presbyopic population in these age groups. Among these people, virtually all of them were highly interested in MicroLine. Overall, the survey helped to further validate our commercial assumptions and that there is a very high interest from patients within the target subgroup that we had previously identified, representing approximately 43 million people in the United States. In summary, the results of the surveys helped validate our assumptions and show that there is significant interest in our products with the microdose delivery platform. With that said, I would like now to turn the call over to John to discuss our financial results.

Thank you, Michael, and once again, thank you all for joining us this afternoon. Before I review our financial results for the three months and full year 2019, I would like to note how pleased we are that Eyenovia was able to close its private placement yesterday. We do believe that the net proceed from the transaction will help fund our operations likely into the first quarter of 2021 to support our MicroLine and MicroPine clinical studies as well as complete and submit our new drug application for MicroStat. And now let me review our financials for the three months ended December 31, 2019. For the fourth quarter of 2019, we reported a net loss of approximately $5.2 million with $0.31 per share. And this compares to a net loss of approximately $6.2 million or $0.60 per share for the fourth quarter of 2018. Research and development expenses totaled approximately $3.3 million for the fourth quarter of 2019. This compares to approximately $4.1 million for the same period in 2018, a decrease of 19.4%. For the fourth quarter of 2019, general and administrative expenses were approximately $2 million, compared with approximately $2.1 million for the fourth quarter of 2018, a decrease of 4.5%. Total operating expenses for the fourth quarter of 2019 were approximately $5.3 million compared to total operating expenses of approximately $6.2 million for the same period in 2018, a decrease of 14.5%. Operating expenses include approximately $600,000 of non-cash stock compensation expenses. And now I will review the results for the full-year ended December 31, 2019. For the full-year ended December 31, we reported a net loss of approximately $21.2 million or $1.47 per share and this compares to a net loss of approximately $17.3 million or $1.82 per share for 2018. Research and development expenses increased 26.8% to approximately $14.1 million in 2019 compared to approximately $11.1 million in the prior year. This was primarily the result of increased direct clinical and non-clinical expenses, personnel related expenses and non-cash stock-based compensation expense. For the full year 2019, G&A expenses increased 17.4% to approximately $7.2 million versus approximately $6.1 million for the full-year of 2018. The increase was primarily attributable to an increase in payroll related expenses, costs related to being a public company, non-cash stock-based compensation expense, rent expense and advertising and marketing expenses related to marketing analysis upon the potential commercialization of our products. Total operating expenses increased 23.5% to approximately $21.3 million for 2019, compared to $17.3 million for the full-year of 2018. 2019 operating expenses include approximately $2.5 million of non-cash stock compensation expense. As of December 31, 2019, the company's cash and cash equivalents balance was approximately $14.2 million and this obviously excludes the approximately $6 million in gross proceeds and $5.3 million in net proceeds from our private placement, which closed on March 24. That concludes our financial review. Now, I'd like to hand the call back over to Sean for his closing remarks.

Thank you, John. Before we open the call to questions, I would like to say that we are working diligently to make 2020 a strong year for Eyenovia. As John just mentioned, we were very pleased to have bolstered our balance sheet. We anticipate milestones in our Phase III programs for presbyopia and myopia, as well as the planned MicroStat NDA this year, although we are very closely monitoring the evolving situation of the COVID-19 pandemic and its potential impact on our business. We have a resilient team and as we embark on 2020, we look forward to leveraging their experience as well as that of our expanded Scientific Advisory Board, including Professor Mark Bullimore and April Jasper to make this year a success. That concludes our prepared remarks. We would now like to open the call to questions. Operator?

Certainly. [Operator Instructions] Our first question comes from the line of Matt Kaplan from Ladenburg Thalmann. Your question, please. Mr. Kaplan, you might have your phone on mute. Now we can hear you.

Can you hear me? Hello.

Yes.

Yes. Hi, Matt.

Hi, Sean. Thanks for taking the questions. Question for you. I guess, can you help us understand the competitive landscape with respect to, I guess, new treatments and development for presbyopia. Understanding like obviously the current standard of care is -- are reading glasses. But what do you see on the horizon in terms of other drugs or other therapies that are in development?

Yes, Matt. Let me take that. Michael, do you want to take that? Perfect.

You could start, John.

All right. I will.

Well, I would just -- I'll pass it on quickly to Michael. I think he can really educate us, but all I wanted to start out by saying that we're obviously not the only company that has clued into the opportunity here. I think today much more than ever before and as an ophthalmologist, I can say how we always used to discount peoples affliction with near vision problems and send them immediately to reading glasses. And I can say this paradigm and patients' awareness and need for a lifestyle modification and not to be shackled to a hardware approach has really changed and more so than before. So again, this is a great opportunity for pharmacologic treatment of presbyopia. And we are in the forefront of this. Obviously, other companies are following suit or in that space as well. Currently, nothing approved. But I'll pass on to Michael to give a little more granularity on the competitive landscape. Michael?

Yes. Thank you, Sean. Matt, the way I look at this is that there's basically three different groups of things. There's new devices, there's using existing drugs for what I would call the on-demand treatment of presbyopia, and then longer term there's new drugs for the more permanent correction of presbyopia. On the front of the drugs for perhaps a more permanent correction, that, for example, is being done, I believe by Novartis. They're in Phase II. So that's still many years away. And we don't know if that has a high probability of success, but their approach is to do something that actually softens the lens to effect the disease in that way. In terms of the devices, you have new contact lenses, for example, for presbyopia that people might want to try that will be coming out. And then on the drug front, the existing one, all the ones that are being looked at, there's about four companies currently active in this area are either pilocarpine like ours or some combination with pilocarpine. And I think where we potentially win there is because of the microdose platform, we can affect the same kind of physiological effect on the pupil that the others would do. But what we're looking for is to have something that's much better tolerated and with less of the nuisance side effects known to pilocarpine, primarily the one being a headache. Does that answer the question?

That's very helpful. Thank you. And in terms of the stages of development that those four companies are in, are you ahead of them, behind them? Where are they in development?

We are ahead of everyone except possibly Allergan, who has, as far as we know, finished their Phase III studies, but have not filed anything yet. Everyone else we are ahead.

Great. Thank you. And then just focusing on MicroStat for a moment. Just wanted to get a sense in terms of where you are in preparation for the NDA filing later this year. And could the COVID-19 pandemic have an issue on that filing, or is that -- is that timeline won't be affected?

Yes. Matt, I'll take that also because we lost Sean for a moment. But I can tell you where we are is exactly where we said before. We are just actually waiting for the physical stability studies. We just have to take another dip into there in the next couple of months. Other than that, everything is ready to go. And as soon as we have those stability results, we'll be able to file that NDA by the end of this year. There's nothing that we can see at the moment that would impact us in terms of COVID, because this is really just getting the stability results and then just writing it up.

Okay, that's helpful. Thank you. And then, Michael, last question for you. How do you think the MicroStat will be adopted by practices? And I guess, specifically, what do you see as the value proposition effort that you're going to make to practices?

Yes, that's a great question. The value proposition there actually helps in a number of different ways. First of all, it is faster for them and what they want to do is increase throughput instead of waiting 20, 35 minutes or longer for a patient to dilate, to be able to know reliably what's going to happen. They could schedule better and get the patients in and out. It's more comfortable for the patients. As Sean said, only 1 out of 131 of the patients in our study had to complaint about stinging, which is unusual for these drugs because when you take them with a regular eyedropper bottles, often they have to use an anesthetic because of the sting. It's safe or potentially because you can't touch the eye and I've spoken to a number of doctors where they do have a concern about using these larger bottles that they do for economic reasons and having the tip touching an eyelash or touching something it shouldn't touch and then go on to the next patient. I think in the current environment, this is going to become even more important. And then lastly, our strategy is to make it available to them at a cost that's not going to be very different than what they're currently doing. So we know that they're currently spending about a $1 a patient, if not more, with those big bottles. Our intent is to price MicroStat at roughly about $85 a unit, which will get you about 75 patients uses out of there. So that -- the idea of cost as a barrier gets completely removed.

Okay. Thanks. Thanks a lot guys and [indiscernible] well. Thank you.

Thank you.

Thank you, Matt.

Our next question comes from the line of Jonathan Aschoff from ROTH Capital. Your question, please. Mr. Aschoff, you might have your phone on mute. We are not hearing you at the moment.

Hello?

Now we can hear you.

Okay, great. Thanks. So the one question that I have pertains to MicroLine. And although it's similar to Matt's, I think it's a little more direct, so I'm going to ask it anyway. As beneficial as it can be second to market, with a competitive advantage such as method of administration, say, after Allergan's [indiscernible] and a large sales force from them paving the way in a marketplace against relatively inexpensive reading glasses. The crux of my question is, how do you plan to pitch MicroLine against, say, Novartis's product potentially being disease modifying versus both yours and Allergan?

Okay. I guess I'll take that one also, this is Michael. You know the Novartis product we are keeping an eye on, but this is not the first time somebody has tried to come up with something that softens the lens. I've been doing this for almost 30 years and I remember there used to be drugs that people were looking at to soften the lens to prevent cataracts, and they've not been successful. So we'll keep an eye on it. But I don't know what the probability of success of that product will be. As far as Allergan's products, I would think that we'll have a better profile. We know from testing in our recent quantitative research, our assumed profile versus there assumed profile and if we perform in the clinical trial, the way that I expect that we will, the idea of being able to offer a patient something that is easier to take, needed to take and also doesn't give them as much of a headache in itself can be a winning proposition. Sean, do you want to add anything to that?

No, I think that's covers it. I know everybody wants to ascribe probabilities to products and development -- developments in the pipeline. Obviously, the probability of a new molecular entity, which will be in a first-in-class indication without an established mechanism of action is very different in Phase II or Phase III than an established molecular entity that's been around for 60 years, whose therapeutic profile we know extremely well. And again, I think that obviously there is a huge need for on-demand and we don't even know what the side effects will be for a disease modifying entity. A lot of things that are uncertain when you talk about future imperfect, particularly through the telescope of looking at something we don't completely understand has never been on the market. So I think that right now MicroLine and what we've seen in our research and Michael's research has been extremely compelling. I mean, it's really been off the charts in terms of what people see as a need that can immediately address pharmacologically their presbyopia. And only the future will tell what other therapeutic modalities are on the landscape.

Okay, guys. Thank you very much.

Thank you. Our next question comes from the line of Esther Rajavelu from Oppenheimer. Your question, please.

Hi. Thank you for taking my question. I have a couple. One, that you touched on the supply chain initially, can you help us understand how much product you have in, for your clinical trials right now that you have access to and also the devices? And then I have a quick follow-up as well.

Yes, Esther. Let me answer that. Again, as a public health person, in addition to being a doctor, one of the things we don't really understand today is what are we facing? Are we facing a pandemic in a situation that lasts four weeks of current measures. Does it last 14 weeks or does it last 44 weeks? We as a team have made contingency measures and we've also assumed proactively measures to create lead time cushion in our supply chain. So we currently think under the current circumstances, we have enough supply chain products to meet our clinical trial needs, or the enrolling ongoing clinical trials and also for clinical trials like MicroLine with the VISION 1 and 2. Again, it will be interesting to see what happens and we're monitoring it very closely. If in 44 weeks we are in the same situation, obviously the impact will be different. But currently we we've taken measures to ensure patients enroll in our trials, continue to be supported, and we want to be back in the saddle as quickly as possible when this crisis is done, so that we can regain time and hopefully the cushion that we've built, that will be helpful for us in that respect.

Understood. And in terms of the MicroLine trial initiation, I have that down for the second quarter of this year with a potential top line by year-end 2020. Is that timeline still intact?

So the guidance that we've given that -- in our really most meaningful outcomes here had been to produce Phase III data and the results by the end of the year and then our current evaluation supports that. Of course, we really don't know the uncertainty we're facing. Again, is that a 4, 14 or 44 week lockdown and where we're going to be. So I would like not to give answers to questions that nobody in this country really has any answers. Maybe we can revisit that in a quarter.

Right. But the FDA has guided to -- has put out guidance that basically has even stopped clinical trial enrollment for -- on quality trials. So I'm just curious to understand if the second quarter, which is essentially in a couple -- in a week or so, that kind of falls within that one month time period that you're talking about, right. So if there is -- let's say, if there is a delay of incentive starting in the second quarter, if you end up starting in the third quarter, does that affect the timeline for that readout?

Yes. So, Esther, I think we're tracking with our milestones, the most meaningful milestone for us is the different Phase III results by the end of the year. And we've build enough cushion in some of our operations to do that. I would not like to be as granular about things that we cannot predict right now and we're reassessing the situation as we go forward. We have full readiness and of course a lot of it is impacted more immediately by where we are with the COVID pandemic. But it's a pandemic that really nobody knows how long it will last. We currently continue with our guidance that at the current moment unless that becomes much longer than anticipated, we will be able to get back in the saddle to produce Phase III results by the end of the year from the MicroLine product.

And then my last question. The device that you're using for MicroLine as well as for MicroPine, is that you had -- initially you kind of talked about that second gen device that will have sort of compliance monitors and Bluetooth capabilities. Is that the device that you're using for the trial?

Yes. Our device that we're using in the clinical trials and the one we're going to go forward with [indiscernible] will have -- they both have all of the compliance and electronics necessary for that. And again, this is part of the -- it's inherent to the Optejet system, yes.

Thank you.

You're welcome.

Thank you. Our next question comes from the line of Yi Chen from H.C. Wainwright. Your question, please.

Thank you for taking my questions. My first question is, could you tell us the current enrollment status of the CHAPERONE trial? For example, what percentage of the patient enrollment target has been reached?

Yes. So as we've said before, Yi, I think this was a question that came out the last quarter. We abstain from giving day-to-day enrollment status for the Board on our clinical trials. What we have provided guidance is that we would like to and the goal is to fully enroll the study by the end of the 2020. And I think we're looking at that as the most meaningful one, because obviously from that time, once we have last patient into the trial, LPI into the study by the end of the year, from there on, we really start tracking the clock for the 3-year endpoint. So for us the key objective is to get the last patient into our study and fully enroll the trial by the end of the year.

So, so far, you have not observed any disruption in the enrollment speed due to the pandemic, right?

That wouldn't be absolutely correct, because it will be remiss to say that we have certain sites that especially in the New York area, where we are, where we're facing a real situation here with a lot of cases and there has been an impact on certain sites to continue to enroll. That really leaves us hopeful, though, that very at the point when this is resolved and people are back to normal lives, we can catch up on that. And we are in the process and as you know, we are bringing up a very strong suit, a site of validated sites with a lot of experience and soft enrollment. This is not a population where patients are hard to find. So we really hope that by the end of the year, we will be able to compensate. And if not, we're going to let you know once we really understand where we're heading. And I think that in the spending, at least for my senior staff and for our company, will probably be in a month or two.

Okay. The second question. Just to clarify, the MicroLine Phase III study in presbyopia is still going to start in second quarter and produce results by the end of this year, correct?

So as I mentioned before to Esther, I think she asks the same question. We're committed to providing Phase III results of a completed program for MicroLine and trial by the end of the year. Exactly when we're going to initiate it right now, it's something that we're evaluating, whether we initiate it right within the second quarter or the beginning of the third quarter. But that to us has been much less of a question as much as can we complete the study by the end of the year, the VISION 1 and VISION 2 studies which is what really determines the clock for the NDA submission.

Okay. Final …

Sean, if I might add …

Sure. Go ahead.

Can I just add one thing to that? I get the feeling that some people might be comparing our VISION study to the studies done by Allergan. And I think we should just make the point that our design is substantially more efficient and quicker than what Allergan did. So where we can't say exactly when that study will start precisely, the ability to finish it by the end of the year is something that we're still comfortable with.

Got it. Final question. Could you talk about the expected operating expenses for 2020 and whether the current shares outstanding is 19.8 million shares?

The current shares outstanding are 19.8 million shares. It's a correct statement post transaction. In terms of the operating expenses, so if you look at the fourth quarter, we showed total operating expenses of $5.3 million. Included in that amount was about roughly $700,000 of non-cash stock compensation and depreciation expense. So on a quarterly basis, if you look at it, we were about $4.5 million, $4.6 million per quarter of cash based operating expenses. We think that's probably a solid number as we look out over the next three quarters or so. It might be a little smaller as we look second quarter and third quarter and increase, as we get into the MicroLine Phase III study. But that's a good average if you look at it, about $4.5 million to $4.6 million a quarter.

Got it. Thank you.

That being said, let me just add two comments that I think are pretty important. A lot of our expenses, probably a majority of them are project oriented expenses. So we do have the flexibility that if we needed to reduce expenses from the level I just gave you, we do have the ability to reduce if needed. If -- not just to give you some idea with the current uncertainty and what's happening in the country, we do have some flexibility on that number, but that's certainly the operating plan that we're looking at.

Okay. Thanks.

Thank you.

Thank you. Our next question comes from the line of Maria Barbera from National Securities. Your question, please.

[Technical difficulty] the achievements in 2019. So continuing with the MicroLine initiation and you already said that you hope to start in the second quarter 2020, but depending on the circumstances. But I was wondering if you could answer the question of has the IND been submitted?

No, the IND has not been submitted as of now. Although it is prepared and we have not submitted it at this very point in time. But again, we will submit it prior to the initiation of the study, which we hope to complete before the end of this year, so we can provide you with Phase III data on the program.

Okay, great. And then for MicroStat, I believe you said the stability study will be finished in the next couple of months and then you will submit the NDA. But I believe, Michael, said end of 2020. So is there a reason why you wouldn’t be able to submit in mid-2020?

Yes, so we’ve basically mentioned before that in the second half of the 2020, we're going to submit the NDA. Again, that module is being compiled. We have all the clinical data. We were very fortunate that our Phase III clinical studies were completed with very strong data on both efficacy and safety. And that's been already completed and included in the module. When we have the final stability, 12 months stability data, that would be compiled into the module. And from what we understand now, I think the FDA is still operating and reviewing submissions and able to handle submissions, so we hope that sometime in the second half of 2020. And again, we need to see how everything unfolds in the next month or so. But the goal is to submit as early as we have the data from the stability studies and we'll follow that with the NDA submission.

Okay, great. Thank you for taking the questions.

Sure, Maria.

Thank you. And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Dr. Ianchulev for any further remarks.

Thank you. Again, I would like to thank everybody for joining us today. And I really hope that this 2020 year, which is symbolic for ophthalmology, it's 2020 vision. And our VISION 1 and Vision 2 trials in MicroLine that we hope to initiate and complete this year. I really want to thank you for participating today. And I wish everybody to stay safe, alert and prepared and fair well through this difficult times. And hopefully we'll be able to provide you more granular update in the next conference call. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.